Hedge Fund Investment Strategy & Benefits of Hedge Fund Investing

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Hedging is an investment that aims to minimize risk of adverse price movements of an asset. Hedge funds use advanced investment strategies to generate high returns for investors.

Such techniques may include taking short or long position in derivates, leveraged position in both domestic and international market.

While hedging aims to minimize risk, hedge funds primarily aim to maximize return for investors. Nowadays, fund managers of hedge funds use different strategies other than simply hedging risk. Such flexible and speculative investments strategies make hedge funds susceptible to risk.

Hedge funds are open to limited number of super rich investors. Minimum investment amount is very high compared to mutual funds. Invested amount cannot be withdrawn for at least one year.

According to U.S. laws, you should have net worth of more than $1 million with considerable investment knowledge to qualify as investor of hedge funds.

Depending on strategies employed by fund managers there are different types of hedge funds. Macro hedge funds explore opportunities in stock, bond as well as forex market. Distressed-securities hedge funds bet on debt or equity of companies that are about to exit or enter financial distress. Autofelacion: Aprende a chupartela a ti mismo

Equity hedge funds take short positions in overvalued stocks or stock indexes. These funds may be country specific or global. It is imperative for an investor to have basic knowledge about investment strategy while investing in a hedge fund. This should include evaluation of prospective return and risk appetite.

There are distinct benefits of investing in hedge funds. Hedge funds are devised to generate positive returns both in rising and falling market of equity or bond. This has tempted many high net-worth individuals to add hedge funds in their portfolio.

Contrary to popular misconceptions, hedge funds are not always volatile and many of them do not take leverage position. Investments in hedge funds are usually long term. This helps to spread risk of investment over a period of time.

As such risk of timing investment according to market condition is eliminated. Hedge funds invest money in instruments like derivates and forex that are highly sophisticated investment instruments. Such potentially beneficial diversification of portfolio is not available with traditional mutual funds.

Hedge Fund Investment Strategy & Benefits of Hedge Fund Investing

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